U.S. Debt Holdings of Foreign Central Banks Continue to Grow
Foreign central banks' holdings of U.S. Treasury securities and agency debt at the Federal Reserve continue to advance. During the week ended March 17, foreign central banks held $3.00 trillion at the Federal Reserve. Of this, roughly 75% of it is held in the form of Treasury securities and the remaining 25% is Fannie Mae and Freddie Mac securities. Although the pace of acquisition has slowed compared with the peak period of crisis, holdings of U.S. Treasury securities has grown at close to 25% on a year-to-year basis (see chart 1) in the past few weeks.
At the same time, holdings of Fannie Mae and Freddie Mac securities have declined from a year ago (see chart 2). The main conclusion is that U.S. Treasury securities are still attractive despite the headline in the financial press about the growing deficit and debt problems of the U.S. economy.
